The Competition Commission has asked the Competition Tribunal to prosecute Netherlands-based seed potato breeder HZPC Holland and its exclusive South African distributor Wesgro Potatoes for the alleged abuse of dominance in supplying Mondial seed potatoes varietal in the country.
Wesgro has an exclusive agreement with HZPC to sell the Mondial seed potato varietal to commercial farmers. In turn, commercial farmers grow the potatoes for sale to consumers as table potatoes.
When a new variety of potato is created, a breeder is afforded exclusive rights over the variety for 20 years. This is a type of intellectual property (IP) right that enables the breeder to recoup research and development costs through the exclusive rights.
“HZPC was granted a plant breeder’s right over the Mondial seed potato varietal in October 1993. The exclusive rights, therefore, expired in October, 2013. The Mondial seed potato varietal should, therefore, be available in the open market, free of IP right restrictions,” the commission explained.
In March 2015, it initiated a complaint against Wesgro and HZPC, contending that HZPC and Wesgro are unlawfully refusing access to other seed growers to the Mondial variety, despite expiry of the plant breeder’s right. The continuation of the exclusivity between HZPC and Wesgro means that other South African potato seed growers are excluded from growing and selling the Mondial seed potato varietal to farmers.
The commission now believes that Wesgro must pay a fine equal to 10% of its yearly turnover.
In addition, the commission is asking that the licence agreement between Wesgro and HZPC be declared void, along with all other related agreements between Wesgro and its customers.
Further, the commission wants the tribunal to interdict the companies from entering into similar agreements in future.